All sections · Part XVIII: Fraudulent And Wrongful Trading
342 Civil liability of directors for wrongful trading: cells of protected cell company
(1) Subject to subsection (3), if in the course of the winding up of the
business of or attributable to a cell of a protected cell company in
accordance with a receivership order or administration order, it appears
that subsection (2) applies to a person, the Court, on the application of
the administrator, receiver, or any creditor or member of the cell, may
declare that that person shall be liable to make such contribution to the
cell‘s assets as the Court thinks proper.
(2) This subsection applies in relation to a person if —
(a) the cell has gone into insolvent liquidation;
(b) at some time before the commencement of the winding up, that
person knew or ought to have concluded that there was no
reasonable prospect of the cell avoiding insolvent liquidation;
and
(c) that person was a director of the protected cell company at that
time.
(3) The Court shall not make a declaration under this section in respect of
any person if it is satisfied that, after the condition specified in subsection
(2)(b) was first fulfilled in relation to him, he took every step with a view
to minimising the potential loss to the cell‘s creditors that he ought to
have taken.
(4) For the purposes of subsections (2) and (3), the facts which a director of
a protected cell company ought to know, the conclusions which he ought
to reach and the steps which he ought to take are those which would be
known, reached or taken by a director complying with section 144.
(5) For the purposes of this section a cell goes into insolvent liquidation if
the cellular assets attributable to the cell (and, where the company has
entered into a recourse agreement, the assets liable under that agreement)
are insufficient to discharge the claims of creditors in respect of that cell
and the expenses of the receivership order or administration order (as the
case may be).
(6) This section is without prejudice to section 340.
business of or attributable to a cell of a protected cell company in
accordance with a receivership order or administration order, it appears
that subsection (2) applies to a person, the Court, on the application of
the administrator, receiver, or any creditor or member of the cell, may
declare that that person shall be liable to make such contribution to the
cell‘s assets as the Court thinks proper.
(2) This subsection applies in relation to a person if —
(a) the cell has gone into insolvent liquidation;
(b) at some time before the commencement of the winding up, that
person knew or ought to have concluded that there was no
reasonable prospect of the cell avoiding insolvent liquidation;
and
(c) that person was a director of the protected cell company at that
time.
(3) The Court shall not make a declaration under this section in respect of
any person if it is satisfied that, after the condition specified in subsection
(2)(b) was first fulfilled in relation to him, he took every step with a view
to minimising the potential loss to the cell‘s creditors that he ought to
have taken.
(4) For the purposes of subsections (2) and (3), the facts which a director of
a protected cell company ought to know, the conclusions which he ought
to reach and the steps which he ought to take are those which would be
known, reached or taken by a director complying with section 144.
(5) For the purposes of this section a cell goes into insolvent liquidation if
the cellular assets attributable to the cell (and, where the company has
entered into a recourse agreement, the assets liable under that agreement)
are insufficient to discharge the claims of creditors in respect of that cell
and the expenses of the receivership order or administration order (as the
case may be).
(6) This section is without prejudice to section 340.
